~ Gary Chaplin. HeadHunter

Director Movements

Recent survey of the countries leading businesses gave interesting results.

A number of unsurprising trends emerged from the survey:

NEDs: UPWomen: DOWNCEO NEDs: DOWNDirectors: DOWNRisk Committees: UP

It is no surprise that the number of risk committees has doubled in the past two years, and that the increase has taken place both among banks and other companies.

Again, not a surprise to see board sizes continue to decline, following the trend seen for over 10 years that smaller groups of more expert directors are more effective than the larger boards that used to prevail.

Downward ShiftsFemale Leaders
Despite Lord Davies of Abersoch’s ascertains that there should be more women on Boards, there are less than there were when his report was published – only 20 in the FTSE-150 and only 43 in the FTSE-350, equating to just 4%! A slightly more encouraging 14.3 per cent of non-executive directors are female though. Easy to see why the pressure for reform is increasing, with the general recognition that diverse boards simply perform better – but it is realistic? Are there enough women to go round?

Board Sizes Decreasing
The number of Boards with 12 or more members in the FTSE-150 is now only 22%, down from 30% just last year. The inevitable result of Boards getting smaller is that they include fewer executives. However, this means there must be sufficient non-executives to populate Board committees appropriately as work becomes more scrutinised and time consuming. A trend backed up by our Non-Executive Practice seeing a 600% increase in NED appointment!

Foreign Directors
In 2005, the proportion of foreign directors on FTSE 150 Boards was 32%. This year’s number represents a significant drop of more than a-third and suggests there may be a post-crisis reluctance on the part of foreign executives to commit the time to serving on an overseas Board when their own businesses need their full attention. UK Boards have until recently been among the most culturally diverse in the world, which has been a source of competitive advantage. A trend that needs very close monitoring over the next few years.

CEO NEDsChairmen are increasingly reluctant to allow their CEOs to take on outside Boards, with only 41% of CEOs having non-executive interests. This can be attributed for two related reasons:

Time commitment expected of non-executives has grown steadily in recent years (See Board Sizes Decreasing Above!)

In the present economic climate CEOs have pressing needs to deal with in their own businesses.

The proportion of CFOs serving on an outside Board is also just over 40%. The reasons will be similar, but with the countering fact that CFOs are in great demand as audit committee chairmen, which demands a very significant time commitment. It is a concern that so much experience and talent is unavailable to large company Boards, to say nothing of the benefits that executives can gain themselves from serving on an outside Board.